(Yicai Global) June 12 -- Hainan Airlines Holding, which runs the flagship carrier of the southern Chinese island getaway of Hainan, was added to the country’s list of dishonest debtors yesterday after failing to make good on a CNY344 million (USD48.6 million) debt.

The Zhejiang Higher People’s Court has labeled Hainan Airlines as a dishonest debtor, according to a notice on China’s Enforcement Information Disclosure website today. The designation occurs when a firm refuses or neglects to pay a maturing debt when it has the means to do so. The Haikou-based carrier has yet to comment.

It is the latest humiliation for the airline in a very difficult year. The company’s net profit plunged into negative territory in the first quarter with an eye-watering CNY6.3 billion (USD890.5 million) loss, compared with a CNY1.14 billion profit in the same period last year, as the Covid-19 pandemic slammed the travel sector. Revenue sank 63 percent to CNY6.9 billion, according to its first-quarter earnings report.

The company’s stock price [SHA:600221] edged 0.6 percent lower today to end the week at CNY1.63 (USD0.23).

The airline industry has not yet returned to normal operating levels, it said. Hainan Airlines has temporarily transformed passenger planes into cargo ones and taken other mitigating measures. It is expected that performance will improve this quarter, although the losses will remain, the company added.

Parent firm HNA Group has also been in financial difficulties for some time now. An overaggressive diversification drive saw the aviation-to-financial services conglomerate run up debts of USD94 billion by 2017.

As of early 2018, it had sold over CNY300 billion (USD42.4 billion) of sideline business assets to help with its liquidity crisis. The provincial government sent in a task force in February to help HNA with its risk management.

Editor: Kim Taylor